In re Griffin, 2:10–bk–73471.

509 B.R. 864

In re Robert and Julia GRIFFIN, Debtors.

No. 2:10–bk–73471.

United States Bankruptcy Court,

W.D. Arkansas,

Fort Smith Division.

Signed April 28, 2014.

Thomas S. Streetman, Crossett, AR, for Trustee.

Richard L. Cox, Chapter 11 Trustee.

Ruston C. Welch, Welch Law Firm, P.C., Oklahoma City, OK, Jackie L. Hill, Jr., Dunn, Swan & Cunningham, P.C., Oklahoma City, OK, for Arvest Bank.

ORDER AND OPINION GRANTING TRUSTEE'S MOTION TO ENFORCE SETTLEMENT BUT DENYING RELIEF REQUESTED

BEN BARRY, Bankruptcy Judge.

On April 3, 2013, Richard L. Cox, the chapter 11 trustee appointed in this case, filed his Motion to Enforce Settlement Agreement and Compel Arvest Bank's Delivery of Documents [Motion to Enforce], seeking the enforcement of a settlement agreement between Arvest Bank [Arvest]; Robert and Julia Griffin [Griffin]; and four of Griffin's companies: Stinson, Inc. [Stinson], The Plantation, LLC [Plantation], SabramEstates West, LLC [Sabram Estates West], and Silver Leaf East, LLC [Silver Leaf East] [collectively with Griffin referenced as the debtors].¹ On May 10, 2013, Arvest filed a response that incorporated by reference an objection that it had filed previously in response to the debtors' January 27, 2012 motion to enforce. Both the trustee and Arvest requested attorneys fees and costs in relation to the Motion to Enforce. The Court held a hearing on the Motion to Enforce that began on November 6, 2013, and concluded on December 9, 2013. On both dates, Thomas S. Streetman appeared on behalf of the trustee, and Jackie L. Hill, Jr. and Ruston C. Welch appeared on behalf of Arvest. At the conclusion of the hearing on December 9, 2013, the Court instructed the parties to file post-trial briefs in lieu of closing arguments and took the matter under advisement. For the reasons stated below, the Court grants the trustee's Motion to Enforce the parties' settlement agreement, but denies the relief requested by the trustee.

Background

On July 6, 2010, Griffin filed this chapter 11 bankruptcy case. Approximately two months later (on various dates in September 2010), Plantation, Stinson, Sabram Estates West, and Silver Leaf East [the LLC debtors] (along with ten other companies also owned by Griffin), filed chapter 11 bankruptcy cases. Prior to the debtors filing their respective chapter 11 cases, Arvest had obtained state court judgments against Plantation, Stinson, and Sabram Estates West. On October 29, 2010, the Court modified the automatic stay in the LLC debtors' cases to require the LLC debtors to make monthly payments to Arvest by the 7th day of each month [the For Cause payments] because the debtors had frustrated Arvest's collection efforts.² The Court ordered the For Cause payments to commence on December 7, 2010, and continue until plans of reorganization were confirmed. The Court specified that if the debtors failed to timely make any of the For Cause payments, Arvest would be entitled to again file motions for relief that, barring unusual circumstances, the Court would grant.

None of the debtors ever filed plans of reorganization. On August 4, 2011, Griffin, the LLC debtors, and Arvest entered into a two-page settlement agreement [Settlement Agreement].³ The Settlement Agreement, reproduced in its entirety below with the exception of the parties' signatures, provided as follows (emphasis added by the Court):

GRIFFIN SETTLEMENT AGREEMENT

1. Transfer of Properties. Plantation LLC, Sabram Estates West, LLC, and Silver Leaf East LLC (the “LLC Debtors”) will convey their respective mortgaged properties (the “Mortgaged Properties”)

to Arvest by Warranty Deed in consideration of the value determined by the Bankruptcy Court for purposes of interest payments.

2. Stinson Property. Robert and Julia Griffin (“Griffin”) shall cause Stinson Inc. to execute and deliver a Warranty Deed conveying the following described “Stinson Property” free and clear of all liens or encumbrances to Arvest:

2.1 Ninety (90) acres at 1420 W. Center Street, Greenwood, AR, Parcel No. 60001–0000–03325–00;

2.2 Eighty (80) acres at 1420 W. Center Street, Greenwood, AR, Parcel No. 60001–0000–0453–00; and,

2.3 Thirty (30) acres at 1717 W. Main Street, Greenwood, AR, Parcel No. 60001–0000–04517–00, less the approximately five (5) acres homestead tract.

3. Fawn Trail Property. The Fawn Trail Property shall consist of the real and personal property and all improvements located at 4250 Fawn Trail, Greenwood, AR and identified as parcel 64271–0010–00000–00 and as Lot 10 in Deer Wood Estates III to the city of Greenwood, Sebastian County, Arkansas, consisting of three (3) acres more or less. Griffin shall cause East Hills Construction Inc. to execute and delivery a Warranty Deed in favor of Arvest into escrow, subject to timely and full performance of the terms hereof, conveying the Fawn Trail Property free and clear of all liens or encumbrances, to be delivered to Arvest only if Griffin or LLC debtors fail to timely perform this agreement. If the terms of this agreement are fully performed by Griffin and the LLC debtors, then the Fawn Trail Warranty Deed shall be returned to Griffin. If Griffin and the LLC Debtors fully perform all terms herein except the payment of the $270,000, then Arvest will accept the Warranty Deed conveying title to the Fawn Trail Property free and clear of liens at the time of delivery and recording of the deed in satisfaction of the $270,000 payment and this Agreement shall be deemed completed and fulfilled for purposes of paragraph 7 hereof.

4. Relief from Automatic Stay—LLCs. The automatic stay in each of the LLC Debtor's Bankruptcy Cases shall be terminated as to the Mortgaged Properties and Stinson Property, the Mortgaged Properties and Stinson Property shall be abandoned and quit claim deeds shall be executed by the LLC Debtors in favor of Arvest.

5. Relief from Automatic Stay—Griffin. The automatic stay in the Griffin Bankruptcy Case shall be conditionally terminated to provide that if Griffin does not timely perform according to this agreement and satisfy any payments required herein, Arvest shall be entitled to immediately present confessed judgments for entry in the State Court Actions liquidating Arvest's claims against Griffin therein in the full amount of the Indebtedness, subject to credit of the amounts given herein as consideration and or in credit bids for foreclosure of the respective Mortgaged Properties.

6. Cash Payments. Griffin shall pay to Arvest, in collected and immediately available funds, the following amounts:

6.1 Within twenty [sic] (30) days of Bankruptcy Court Approval, Four Hundred Fifty Thousand Dollars ($450,000.00); and,

6.2 Within ninety (90) days of the Bankruptcy Court Approval, an additional Two Hundred Seventy Thousand Dollars ($270,000.00).

7. Satisfaction of Arvest's Claims. If Griffin and the LLC Debtors (collectively,“Debtors”) fully and timely perform all terms of this Agreement, Arvest will release its proofs of claim in the Bankruptcy Cases and deem all of the Debtors' Indebtedness satisfied.⁴ If the Debtors fail to fully and timely perform all terms of this Agreement, Arvest's proofs of claims in the Bankruptcy Cases and the Indebtedness shall remain unsatisfied to the extent not credited or credit bid for the Mortgaged Properties or paid in cash.

8. Debtor Releases. Effective on Bankruptcy Court Approval, each of the Debtors, on behalf of themselves and any and all other entities owned or controlled by any of the Debtors, shall unconditionally release Arvest and its subsidiaries, affiliates, directors, officers, shareholders, employees, agents, attorneys, representatives and their respective heirs, legal representatives, executors, administrators, successors and assigns (the “Released Parties”) from any and all claims of any kind or character, known or unknown, now existing or hereafter to accrue against the Released Parties.

9. Bankruptcy Court Approval. This Agreement shall be binding on all parties hereto, subject only to the approval of this Agreement by the Bankruptcy Court pursuant to a Compromise Motion, in form acceptable to all parties hereto. The terms hereof shall be further incorporated into more comprehensive settlement documentation acceptable to the parties, but containing not less than the foregoing material terms. Provided, in the event the Bankruptcy Court does not enter a final non-appealable order approving the Compromise Motion within sixty (60) days of the filing of the Compromise Motion, this Agreement shall become null and void.

10. Continued Action. Until such time as the Compromise Motion has been approved, and the Debtors have fully performed the terms hereof, all parties shall be entitled to pursue any and all remedies available to them, including pursuit by Arvest of a creditor's plan of reorganization of some or all of the Debtors and other entities, as alternatives to approval of the Compromise Motion and or the Debtors' performance hereof.

11. Expiration of Offer. This proposal will expire at 5:00 PM on August 4, 2011, if not accepted and returned to Arvest with all of the signatures on behalf of the Debtors.

12. Counterpart Execution. This Agreement may be executed in multiple counterparts, all constituting a single Agreement.

Arvest Ex. 25 at R. 823–26.⁵ On August 16, 2011, Arvest filed Second Motion[s] for Relief from the Automatic Stay and for Abandonment of Real Property and Brief[s] in Support [Second Motions for Relief] in each of the LLC debtors' cases because the LLC debtors had failed to make their August 7, 2011 For Cause payment as ordered by the Court on October 29, 2010. Also on August 16, 2011, Arvest filed a motion seeking the Court's approval of the settlement between Arvest and the debtors [Motion to Approve Compromise], thereby effectuating paragraph 9 of the Settlement Agreement (stating that the agreement was binding on all parties subject to Court approval “pursuant to a Compromise Motion, in form...